The bank on Monday marked down its 2016, 2017 and 2018 projections to 6.4 percent, 6.1 percent and 5.8 percent, respectively from 6.7 percent, 6.5 percent and 6.2 percent, previously. The government is targeting growth of "around 7 percent" this year.

Goldman's longer-term growth forecasts are based on three factors – labor, capital and productivity.

In the new series, real GDP growth, at 7%, surprisingly slipped below gross value added (GVA) growth, at 7.1% despite higher net oil taxes. But the nominal GDP growth, at 8.8%, was higher than 7.1% GVA growth in line with expectations. GVA growth, at 7.1%, expectedly improved from 6.1% in March on base effect.

However, lead indicators in the economy point to a very slow recovery. These indicators have signalled since last August that growth is bottoming out, although there has been no discernable improvement since.

It is lending rate cuts rather than capital expenditure that will drive recovery. Not surprisingly, capital expenditure has actually slipped to 29.4% of GDP in June quarter from 30.3% in March 2015. Although it is conventional wisdom to say that the last cycle was driven by investment, the fact is that this itself was spurred by rate cuts under former Reserve Bank of India (RBI) governor Bimal Jalan

Japan had a negative second quarter

The second-quarter figures for Japan’s GDP revealed what is euphemistically known as “negative growth”: The figures, announced on Aug. 17, showed an annualized contraction of 1.6 percent from the first quarter. Despite the quarterly downturn, growth for the first half of the year was still a respectable 2.2 percent, and many economists are forecasting a return to the plus column in the third quarter. A sharply weaker yen has helped exporters and pushed up profits from the overseas operations of big Japanese companies.

Euro zone manufacturing growth eased in August, adding to the ECB's woes as it battles to spur expansion and inflation with an asset purchase program.

Markit's final manufacturing PMI for the euro zone was 52.3 last month, down from 52.43 in July, though it has been above the 50 mark that separates growth from contraction for over two years.

Growth in the U.S. manufacturing sector slowed to its weakest in almost two years in August, with the Markit PMI falling to 53.0 in August, down from 53.8 in July.

"August’s survey highlights that the U.S. manufacturing sector continues to struggle under the weight of the strong dollar and heightened global economic uncertainty, but resilient domestic spending and subdued cost pressures are keeping the recovery on track," said Tim Moore, senior economist at Markit.

Canada's factory activity contracted in August, with the Markit/RBC PMI falling to a 49.4 from 50.8 in July.

In other data on Tuesday, Canada's economy shrank at an annualized 0.5 percent rate in the second quarter, putting the country in recession for the first time since the financial crisis of 2008 with the cheaper price of oil taking a toll.

Brazil's Markit/HSBC PMI fell further in August to 45.8 from 47.2 in July. Brazil's economy shrank 1.9 percent in the second quarter from the previous three months, government data showed on Friday.